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METALS MORNING VIEW 19/06: Metals prices under pressure after more tariffs prompt risk-off trade

Tue, 06/19/2018 - 07:35

Further threats of US tariffs against China has spooked the markets and three-month base metals prices on the London Metal Exchange were down across the board on the morning of Tuesday June 19, with the complex down by an average of 0.5%.

This adds to the weakness seen in the second half of last week.

Copper led the decline with a 1.2% fall to $6,891 per tonne, followed by a 0.7% drop in aluminium ($2,212 per tonne) and a 0.6% decline in tin ($20,475 per tonne). The others are down between 0.1% and 0.4%.

Volume has been high with 15,234 lots traded as at 6.46am London time. High volume and price weakness does not bode well.

In precious metals this morning, spot gold prices were up by 0.3% at $1,282.46 per oz, while the more industrial precious metals are unchanged in the case of platinum, or weaker in the case of silver (-0.2%) and palladium (-0.3%). On balance the precious metals have been weak in recent days, especially silver that has dropped to $16.45 per oz this morning from $17.32 per oz on June 14.

In China, base metals prices on the Shanghai Futures Exchange were down across the board, with prices down by an average of 1.5%. Zinc was off the most with the most-traded August contract down by 2.4%, while August copper was down by 2.4% at 52,390 yuan ($8,187) per tonne.

In other metals in China, the most-traded September iron ore contract price on the Dalian Commodity Exchange was down by a hefty 5.2% to 447.50 yuan per tonne. Meanwhile on the SHFE, the most-traded October steel rebar contract price fell by 2.6%, while the December gold and silver contract prices were down by 0.9% and 3.1% respectively.

Spot copper prices in Changjiang were down by 1.5% at 52,100-52,480 yuan per tonne and the LME/Shanghai copper arbitrage ratio was higher at 7.59.

In wider markets, spot Brent crude oil prices were off by 1.07% at $74.63 per barrel this morning. The yield on US 10-year treasuries has weakened to 2.8730%, as has the German 10-year bund yield to 0.3670%. Government debt, therefore, up as demand for haven assets rises on the back of US President Donald Trump’s latest rhetoric on tariffs.

The rhetoric has also hit most equity markets in Asia today: Nikkei (-1.55%), Hang Seng (-2.36%), CSI 300 (-2.57%) and the Kospi (-1.67%), while the ASX200 (+0.1%) is marginally higher. This follows weakness in western markets on Monday, where in the United States the Dow Jones closed down by 0.41% at 24,987.47, and in Europe where the Euro Stoxx 50 closed down by 1.09% at 3,466.65.

The dollar index surged on June 14 and set a high of 95.14 on June 15, but it has since consolidated and was recently trading at 94.70. The euro (1.1614) and sterling (1.3250) are also consolidating having been weaker last Thursday, the Australian dollar has fallen to 0.7378 and is the weakest it has been since June last year, while the yen is picking up haven interest and has climbed to 109.59.

Not surprisingly, the yuan is weak at 6.4544 – the weakest it has been since mid-January. The rand is weak at 13.8772, while the rest of the emerging market currencies we follow are weak, but most are not moving too much today given the latest tariff salvo from Trump.

Economic data out today includes the European Union’s current account as well as building permits and housing starts from the US. In addition, European Central Bank (ECB) President Mario Draghi is speaking at the ECB Forum on Central Banking in Sintra, Portugal.

The economic and political environments are not bullish for the industrial metals and as such prices are capped on the upside, with any supply-led rallies attracting selling, as has been seen in copper and lead recently. Prices are now testing the downside once again and given increased trade tensions that are affecting most markets, there could be more room on the downside.

Ironically, we think Trump is being as aggressive as he is on trade because he feels this is the first time in years that the US economy and the global economy are strong enough to take this trade adjustment – as he said in recent weeks China was “very spoilt on trade”. Key now will be whether the markets think the global economy is strong enough and/or whether trade agreements follow.

With treasury yields down and the yen stronger, it appears demand for haven assets is up, so we wait to see if that flows into gold – there is little sign of this so far, but with gold prices trading at levels last seen in December, it may start to look like a relatively “cheap” haven asset.

The post METALS MORNING VIEW 19/06: Metals prices under pressure after more tariffs prompt risk-off trade appeared first on FastMarkets.

Categories: Metals Industry News

EUROPEAN MORNING BRIEF 19/06: Manganese ore prices climb again; copper concs TC/RCs driven higher by smelters; US Ali billet upcharge reaches new high

Tue, 06/19/2018 - 05:05

Good morning from Metal Bulletin’s offices in Asia as we bring you the latest news and pricing stories on Tuesday June 19.

Base metals prices on the Shanghai Futures Exchange were all down during Asian morning trading on Tuesday, with concerns of a full-blown trade war between the United States and China denting market sentiment and inducing a wave of selling across the complex.

Check Metal Bulletin’s live futures report here.

Seaborne and port manganese ore prices advanced again over the past week on higher offers from miners and traders.

Spot copper concentrate treatment and refining charges (TC/RCs) jumped up sharply in the first half of June after smelters overcame resistance from traders and miners to sell at higher levels.

The spot aluminium billet upcharge in the United States has found a new high, which market sources attributed to supply bottlenecks in response to high demand from extruders.

The Chinese domestic ferro-silicon market has lost earlier gains as a result of slow demand outweighing environmentally driven production cuts and anticipated tighter supply. Meanwhile, the European market has been stable ahead of the third-quarter delivery settlements between alloy suppliers and consumers in the steel sector.

Crude steel production in Argentina grew by 11.2% year on year in May, according to figures released by national steel association Acero Argentino on Monday.

The post EUROPEAN MORNING BRIEF 19/06: Manganese ore prices climb again; copper concs TC/RCs driven higher by smelters; US Ali billet upcharge reaches new high appeared first on FastMarkets.

Categories: Metals Industry News

LIVE FUTURES REPORT 19/06: Trade war fears, firm dollar sink SHFE base metals prices; copper leads on downside

Tue, 06/19/2018 - 05:00

Base metals prices on the Shanghai Futures Exchange were all down during Asian morning trading on Tuesday June 19, with concerns of a full-blown trade war between the United States and China denting market sentiment and inducing a wave of selling across the complex.

Copper prices were the most affected with the most-traded August copper contract on the SHFE plunging 2.4% or 1,270 yuan ($198) per tonne to 52,390 yuan per tonne as at 11.37am Shanghai time on Tuesday, compared with last Friday’s close.

The SHFE was closed on Monday due to the Dragon Boat Festival holiday in China.

The weaker tone across the base metals is unsurprising given the recent flare up in trade tensions between the US and China, with the prospect of further tariffs between the two raising concerns that economic growth could be affected, according to ANZ Research.

In addition, a firm dollar continues to weigh on the complex.

Despite retreating from a fresh 2018 high of 95.14 on June 15, the dollar index remains in relative high ground at 94.59 as at 12.09pm Shanghai time on Tuesday.

Furthermore, supply-side concerns are also applying downward pressure to red metal prices, with the recent closure of Vedanta Resources’ Sterlite Tuticorin smelter in India said to affect some 230,000 tonnes of copper concentrates consumption.

Base metals prices

  • The SHFE August aluminium contract dipped 100 yuan per tonne to 14,310 yuan per tonne.
  • The SHFE July lead contract price declined 150 yuan per tonne to 20,060 yuan per tonne.
  • The SHFE September tin contract price decreased 2,050 yuan per tonne to 145,290 yuan per tonne.
  • The SHFE September nickel contract price fell 1,440 yuan per tonne to 114,330 yuan per tonne.
  • The SHFE August zinc contract slumped 550 yuan per tonne to 23,545 yuan per tonne.


Currency moves and data releases

  • The dollar index was down by 0.18% at 94.59 as at 12.09pm Shanghai time. This is down from its recent peak of 95.14 on June 15 – its highest since early November last year.
  • In other commodities, the Brent crude oil spot price slumped 0.81% to $74.83 per barrel as at 11.37 am Shanghai.
  • In equities, the Shanghai Composite slumped 2.97% to 2,932.08 as at 12.05pm Shanghai time.
  • In data today, we have the European Union’s current account as well as building permits and housing starts from the United States of note.
  • In addition, European Central Bank (ECB) President Mario Draghi is speaking at the ECB Forum on Central Banking in Sintra, Portugal.

The post LIVE FUTURES REPORT 19/06: Trade war fears, firm dollar sink SHFE base metals prices; copper leads on downside appeared first on FastMarkets.

Categories: Metals Industry News

NEWSBREAK: Posner, Brock set up metals logistics company, aim for LME approval

Mon, 06/18/2018 - 11:13

Anton Posner and Margo Brock have set up a new logistics company called Mercury Resources, with a focus on global ocean freight and US-based metals warehousing operations, Metal Bulletin learned on Monday June 18.

The goal is to establish partnerships with three or four facilities in the Midwest and East Coast of the United States, and have at least one London Metal Exchange-approved warehouse by the end of the year in the Midwest, Posner told Metal Bulletin.

“We will be starting off with LME metals and then branching out to other commodities such as steel, agricultural products and ferro-alloys,” he said.

Posner and Brock launched Mercury Resources in New York at the end of April, with Posner as the company chief executive officer and Brock as president. They have worked together for many years, first at MidShip Group LLC, CWT’s handling agent in the US, and then CWT Commodities (USA) between 2010 and 2017. They had recently joined T Parker Host to help the family-owned US shipping and stevedoring company develop its logistics business.

This new venture comes at a time when the metals warehousing business is facing headwinds and many companies have been diversifying away from pure exchange-listed operations to combat the threat of shrinking margins and dwindling stocks associated with tougher rules and controls.

But Mercury Resources is better equipped to cope with current challenges, Posner said.

“We are focused on logistics. Exchanges are not the primary part of it. We are core freight specialists and bulk shipment experts that just happen to have LME facilities when needed: it’s not the same model as other LME warehouse companies,” he explained.

Mercury Resources has strong partnerships with shipowners and operates “a bit like a ship broker,” which gives it an advantage in the current environment of surging global freight costs because it can secure competitively low rates, Anton said.

“Higher and volatile freight rates create opportunities for intermediaries like us,” Posner said.

The company already moves a lot of metals, including alumina, aluminium, copper, zinc and lead and steel bulk shipments on sea, river and rail, while working with other warehouse companies for container freight.

The post NEWSBREAK: Posner, Brock set up metals logistics company, aim for LME approval appeared first on FastMarkets.

Categories: Metals Industry News

EUROPEAN MORNING BRIEF 18/06: Q3 FeCr benchmark likely to be smaller than expected; US Ali scrap prices fall; MJP Ali stocks rise 6.4% in May

Mon, 06/18/2018 - 05:30

Good morning from Metal Bulletin’s offices in Asia as we bring you the latest news and pricing stories on Monday June 18.

Three-month base metals prices on the London Metal Exchange were broadly down during Asian morning trading on Monday, with a stronger dollar weighing on the complex.

The dollar index rose considerably last Friday, surpassing its previous 2018 high with a jump to 95.14 – its highest reading since early November last year. It has since retreated but remains in high ground at 94.86 as at 4.16am London time, compared with a reading of 93.55 at roughly the same time on June 14.

Check Metal Bulletin’s live futures report here.

The widely-anticipated third-quarter European ferro-chrome benchmark price reduction is likely to be smaller than early estimates, market sources say, amid rising spot prices in China and Europe.

Some mill-grade aluminium scrap prices in the United States are being weighed down by softness in the terminal markets and mixed demand, while smelter-grade material is steady.

The US Midwest aluminium premium inched up last Friday, with market participants noting that prices in the spot market are not dropping to incentivize buying despite a backwardation on the LME.

Primary aluminium stocks at the three main Japanese ports (MJP) of Yokohama, Nagoya and Osaka rose another 6.4% month on month in May to 284,200 tonnes, according to Marubeni Corp data.

Common themes throughout the US economy are high and rising transportation and logistics costs. Those problems have been acute for the copper industry, leading to ever-rising premiums and questions on when the issue will be mitigated.

The post EUROPEAN MORNING BRIEF 18/06: Q3 FeCr benchmark likely to be smaller than expected; US Ali scrap prices fall; MJP Ali stocks rise 6.4% in May appeared first on FastMarkets.

Categories: Metals Industry News

LIVE FUTURES REPORT 18/06: LME base metals mostly down on strengthening dollar; SHFE closed due to public holiday in China

Mon, 06/18/2018 - 05:25

Three-month base metals prices on the London Metal Exchange were broadly down during Asian morning trading on Monday June 18, with a stronger dollar weighing on the complex.

The copper price at $6,994 per tonne as at 4.16am London time, is down $26 per tonne from last Friday’s close, with around 560 lots traded on Select so far.

Elsewhere in the complex, nickel also gave back some of the gains it achieved late last week, retreating back below the $15,300-per-tonne mark to stand at $15,120 per tonne at the time of writing.

Dollar strength seems to be the main reason behind the weakness witnessed across the LME base metals this morning.

The dollar index rose considerably last Friday, surpassing its previous 2018 high with a jump to 95.14 – its highest reading since early November last year. It has since retreated but remains in high ground at 94.86 as at 4.16am London time, compared with a reading of 93.55 at roughly the same time on June 14.

Adding further downside pressure to the base metals prices was an escalation in trade tensions between China and the United States, which has stirred up some risk aversion in the market.

“…the tit-for-tat tariffs that the US and China announced on [June 15] raised concerns that commodity demand would be materially impacted,” ANZ Research noted on Monday.

The US announced last Friday that it would impose tariffs on $50 billion of Chinese imports, including a wide range of China-made metal-making and mining machinery.

The Shanghai Futures Exchange is closed today for China’s Dragon Boat Festival holiday. The exchange will open reopen on Tuesday.

Base metals prices

  • The three-month copper price fell $26 per tonne to $6,994 per tonne.
  • Aluminium’s three-month price increased $8 per tonne to $2,212 per tonne.
  • The three-month nickel price plunged $55 per tonne to $15,130 per tonne.
  • Zinc’s three-month price edged down $5 per tonne to $3,075 per tonne.
  • The three-month lead price inched $2 per tonne lower to $2,403 per tonne.
  • Tin’s three-month price declined $35 per tonne to $20,765 per tonne.

Currency moves and data releases

  • The dollar index inched up 0.08% at 94.87 as of 4.17am London time.
  • In other commodities, the Brent crude oil spot price slumped 0.6% to $72.60 per barrel as of 11.17 am Shanghai.
  • The economic agenda is fairly light today with the Italian trade balance, German Bundesbank monthly report and the US’ NAHB housing market index.
  • In addition, US Federal Open Market Committee members Raphael Bostic and John Williams and European Central Bank President Mario Draghi are speaking.

The post LIVE FUTURES REPORT 18/06: LME base metals mostly down on strengthening dollar; SHFE closed due to public holiday in China appeared first on FastMarkets.

Categories: Metals Industry News

Glencore to resume DRC royalty payments to Gertler, ending legal dispute

Fri, 06/15/2018 - 17:30

Global trader Glencore plans to resume royalty payments to a former business partner in the Democratic Republic of Congo (DRC), ending a legal dispute that could have resulted in severe disruption to its copper and cobalt mining operations.

The company will make the payments because it is seen as the only viable way to avoid the material risk of the seizure of its assets, which comprise Mutanda Mining Sarl and Kamoto Copper Co SA (KCC), under DRC court orders.

The payments were halted earlier after Dan Gertler was named a specially designated national in December by the United States government, and sanctions were imposed against him and his businesses.

The payments to Gertler will be made in euros without involving US persons, in order to avoid breaching the US sanctions, and all involved parties have agreed to withdraw all pending and threatened litigation between them.

On April 27, Glencore said that its former DRC partner Ventora Development Sasu, a company associated with Gertler, was suing it for $2.28 billion in royalties unpaid by KCC.

Glencore has a tripartite royalty agreement between KCC, state-run miner Gécamines – Katanga’s joint-venture partner in the DRC – and Africa Horizons Investment Ltd (AHIL), a company also associated with Gertler.

Ventora also said in April that the value of future royalty payments owed to it by Mutanda was around $695 million.

If Ventora’s attempt to permanently seize Glencore’s assets had been successful, it would have “severely disrupted the mines and would have enabled Ventora to seize all productive assets at the mines, including mining titles,” Glencore said.

Glencore estimates that it will owe around €10.5 million per quarter for Mutanda starting in July, with access premium payments of as much as €10.4 million per year and a smaller first payment due in 2019. Mutanda will make a true-up royalty payment to Ventora on the date of the settlement agreement of around €4.6 million.

For KCC, Glencore estimates that the royalties for 2018 will be around €10 million per quarter and then for 2019 approximately €16.5 million per quarter.

KCC made a pre-payment to AHIL in 2015 and there is a balance of about €44 million outstanding under the pre-payment, against which current royalties are being offset. Glencore expects that the next royalty payment from KCC will be made in 2019.

The settlement comes amid continuing concern about the sustainability of supplies of the raw materials, which are key in making lithium-ion batteries. Cobalt demand has soared following an expected boom in sales of electric vehicles, with prices hitting near-decade highs last month.

Metal Bulletin’s benchmark price assessment for the low-grade cobalt price settled at $40.50-41.60 per lb, in-warehouse, on June 15, while the high-grade price settled at $40.60-41.75 per lb.

Katanga produced 525 tonnes of cobalt metal contained in hydroxide in the first quarter of 2018 after restarting operations on schedule in March this year.

Earlier this week, Glencore settled a dispute between Katanga and Gécamines, writing off around $5.6 billion in a debt-for-equity swap while it agreed to resolve the capital deficiency at KCC.

The post Glencore to resume DRC royalty payments to Gertler, ending legal dispute appeared first on FastMarkets.

Categories: Metals Industry News

METALS MORNING VIEW 15/06: Metals mixed but strong dollar a headwind

Fri, 06/15/2018 - 09:45

Three-month base metals prices on the London Metal Exchange were for the most part lower on the morning of Friday June 15, led by a 0.6% fall in zinc prices to $3,161 per tonne.

While nickel gained 0.3%, the rest are off between 0.1% and 0.2%. Copper prices were recently quoted at $7,153 per tonne.

Volumes have been average with 5,356 lots traded as of 0707 London time.

This follows a day of weakness on Thursday when the complex closed down by an average of 1.1%, with nickel prices falling by 2.4%, having risen by 2.6% on Wednesday.

Gold and silver spot prices are down by 0.3% with gold at $1,298.99 per oz and silver remaining relatively high at $17.12 per oz, with the gold/silver ratio falling to 1:76, down from 1:82 earlier in the year. Platinum and palladium prices are little changed with prices trading sideways.

In China, base metals prices on the Shanghai Futures Exchange are down across the board with prices down by an average of 0.7%, with the most traded August copper contract price off by 0.5% at 53,510 yuan ($8,338) per tonne.

In other metals in China, the most-traded September iron ore contract price on the Dalian Commodity Exchange was off by 0.4% higher to 470.50 yuan per tonne. Meanwhile on the SHFE, the most-traded October steel rebar contract price fell by 0.1%, while the December gold and silver contract prices were up by 0.5% and 1.2% respectively.

Spot copper prices in Changjiang were down by 0.5% at 53,010-53,170 yuan per tonne and the LME/Shanghai copper arbitrage ratio was higher at 7.48.

In wider markets, spot Brent crude oil prices were off by 0.05% at $75.84 per barrel this morning. The yield on US 10-year treasuries has weakened to 2.9296%, as has the German 10-year bund yield to 0.4100%.

Equity markets in Asia were split on Friday: Nikkei (+0.50%), ASX 200 (+1.29%), Hang Seng (-0.01%), CSI 300 (-0.65%) and the Kospi (-0.65%). Further concerns about a United States trade war are likely to weigh on markets. There was a mixed performance in western markets on Thursday, where in the US the Dow Jones closed down by 0.10% at 25,175.31, and in Europe where the Euro Stoxx 50 closed up by 1.37% at 3,527.11.

The dollar index surged yesterday and is firmer this morning at 95.04, taking it to the highest since November 2017, when it peaked at 95.15. Conversely, the other major currencies have weakened: euro (1.1564), sterling (1.3239), the yen (110.85) and the Australian dollar (0.7458). The yuan has fallen to 6.4158 and most of the emerging market (EM) currencies we follow are weaker, the exceptions being the ringgit and rupiah.

On the economic front, data already out in Europe showed Germany’s wholesale price index climb 0.8%, having previously been up 0.5%. Data out later includes EU CPI, trade balance and UK leading indicators, with US data including Empire State manufacturing index, industrial production, capacity utilizations, University of Michigan consumer sentiment and inflation expectations and treasury long term purchases (TIC).

Copper, zinc and tin prices are giving back more of their recent gains, lead and nickel prices are consolidating and aluminium prices continue to edge lower.

The stronger dollar is a headwind for the metals as is the overall concern over US trade policy. Economic data remains mixed, Chinese data earlier in the weak was disappointing, but US data out yesterday was constructive with retail sales rising by 0.8%. As such, the climate is not particularly bullish and the market may not see follow-through buying until stronger concerted economic data is seen.

Gold prices got some lift following the FOMC rate rise on Wednesday, but the stronger dollar has pulled prices back to the $1,300 per oz level. The pick-up in US trade wars is a concern for the broader markets and may well lead to some pick-up in safe-haven demand. Silver is looking particularly strong with prices back above $17 per oz.

 

Overnight performance BST 07:07 +/- +/- % Lots Cu 7,153 -7.5 -0.1% 2,399 Al 2,249 -4.0 -0.2% 691 Ni 15,320 40.0 0.3% 1,148 Zn 3,161 -19.5 -0.6% 919 Pb 2,458 -2.5 -0.1% 177 Sn 20,805 -20.0 -0.1% 22   Average BM   -0.1%        5,356 Gold  1,298.99 -3.91 -0.3%   Silver        17.12 -0.05 -0.3%   Platinum      903.10 -0.90 -0.1%   Palladium  1,008.10 0.10 0.0%     Average PM   -0.2%  

 

SHFE Prices 07:07 BST Yuan Change % Change Cu   Aug’18     53,510         –290 -0.5% AL   Aug’18     14,520         –155 -1.1% Zn   Aug’18     24,155         –190 -0.8% Pb   Jul’18     20,175         –265 -1.3% Ni   Sep’18   115,820         –910 -0.8% Sn   Sep’18   147,820          –30 0.0% Average change (base metals) -0.7% Rebar   Oct’18  3,879.00         –3.00 -0.1% Au   Dec’18     273.80          1.30 0.5% Ag   Dec’18  3,869.00        46.00 1.2% Iron Ore (DCE) Sep’18 470.5 -2 -0.4%

 

Economic calendar BST Country Data Actual Expected Previous 3:41am Japan Monetary Policy Statement       3:41am Japan BOJ Policy Rate -0.1% -0.1% -0.1% 7:00am Germany German WPI m/m 0.8% 0.3% 0.5% 7:28am Japan BOJ Press Conference    10:00am EU  Final CPI y/y 1.9% 1.9%  10:00am EU Final Core CPI y/y 1.1% 1.1%  10:00am EU  Trade Balance (in euros) 20.2 bln 21.2 bln 1:30pm US  Empire State Manufacturing Index 19.1 20.1 2:15pm US  Capacity Utilization Rate 78.1% 78.0% 2:15pm US  Industrial Production m/m 0.2% 0.7% 2:30pm UK CB Leading Index m/m -0.2% 3:00pm US  Prelim UoM Consumer Sentiment 98.5 98 3:00pm US  Prelim UoM Inflation Expectations 2.8% 9:00pm US  TIC Long-Term Purchases (in $)   58.5 bln 61.8 bln

The post METALS MORNING VIEW 15/06: Metals mixed but strong dollar a headwind appeared first on FastMarkets.

Categories: Metals Industry News

FOCUS: Narrower LME zinc-lead gap could mean old relationship is rekindled

Thu, 06/14/2018 - 16:05

A gap between the three-month prices of zinc and lead on the London Metal Exchange could generally narrow and become more settled in the coming weeks after an extended period of flux, market participants suggested.

The prices of zinc and lead have historically tended to trade in tandem on the LME but they have diverged to a greater degree over the past couple of years – global supply discrepancies and sharp stock movements have spurred volatility in both metals, making it harder to predict their direction with confidence.

The gap between them narrowed to a 2018 low of $544 per tonne on May 24 from its widest in a decade in February at $960.50 per tonne. At the close of trading on June 13 it was $731 per tonne.

The narrowing of the gap from that 10-year high reflects a comparatively bigger move in the zinc price, which has tumbled to around $3,200 per tonne from a 2018 high of $3,595.50 per tonne in February.

Over the same period, lead prices have traded in a smaller window of $250-300, falling to a low of $2,241 per tonne at the start of May before recovering to trade at $2,555 per tonne on June 7.

Steadier markets – and similar pressures across both – in lead and zinc could now re-establish the more typical relationship between the two.

“We all know zinc is coming to its end game after the big bull story last year. The question from a lot of people is whether we could be getting the last kick and squeeze, however,” Oliver Nugent, a commodities strategist at ING, told Metal Bulletin.

“The situation has unraveled quicker than expected, and it’s clear that zinc is now in a downtrend back to sub-$3,000 per tonne levels,” he added.

For zinc in particular, significant stock moves have coincided with the implementation of Section 232 tariffs by the United States on steel and aluminium imports of 25% and 10% respectively from the EU, Canada and Mexico.

The usage of zinc as a protective element for steel brings the US-imposed tariffs into sharper focus – 50% of zinc’s end use is in steel galvanization.

After the initial announcement of Section 232 on March 8, zinc’s three-month price rose more than 2% to trade just short of $3,300 per tonne.

“People are very wary of US trade sanctions. There’s a lot of zinc in New Orleans and, despite that metal being generally seen as off market, it is possible that now that trade sanctions are implemented that [this] metal may become more significant,” SP Angel analyst John Meyer told Metal Bulletin.

“Shipping is going to get more expensive with tariffs looming and potential trade flow interruptions. Consumers are likely to protect themselves, and that could feed through to increased stock levels. In addition, the potential for inflation and rising production costs could put pressure on both metals,” he added.

LME zinc and lead stocks have both fallen since this time last year – zinc inventories are down 25% at 245,650 tonnes while those of lead are down 26% at 133,475 tonnes. Still, zinc stocks are up 26% since the start of 2018, while lead stocks are down 6%.

Zinc’s on-warrant stocks have risen more than 6% in June to 227,250 tonnes while lead’s on-warrant levels are up more than 17% over the same period at 87,000 tonnes.

Available zinc stocks on the LME at 227,250 tonnes as of June 12 are at their highest since February 2017, which dovetails with a slack physical market – spot premiums on zinc ingots have dropped to seven-year lows in Europe and zinc concentrate treatment charges (TCs) reached their highest this year in May.

Zinc’s cash/three-month spread has swung to a backwardation of $38.25 per tonne from a contango of $3.00 per tonne late in May.

By contrast, lead’s cash/three-month spread was last in backwardation on May 22 at $1.15 per tonne and has since remained in contango – it is currently at $13.00 per tonne.

“I think zinc’s backwardation stems from three months ago when you had a lot of selling occur, taking zinc [prices] back down to $3,000 per tonne. In addition, dominant long positions in the market could be looking to squeeze the shorts, with a kind of battle between the two ensuing,” Robin Bhar, head of metals research at Socgen, told Metal Bulletin.

“From a fundamental viewpoint, a broad downtrend in zinc stocks, despite occasional upward spikes, has contributed to this emerging tightness. Whether it will be sustained or blow over, however, time will tell,” he added.

The post FOCUS: Narrower LME zinc-lead gap could mean old relationship is rekindled appeared first on FastMarkets.

Categories: Metals Industry News

METALS MORNING VIEW 14/06: Disappointing Chinese data weighs on base metals prices

Thu, 06/14/2018 - 08:21

Disappointing Chinese economic data suggests there is little to be bullish about and therefore it is unsurprising that the three-month base metals prices on the London Metal Exchange were down across the board by an average of 0.7% on the morning of Thursday June 14.

Nickel led on the downside with a 1.9% drop to $15,355 per tonne, while the rest were down between 0.4% and 0.5%, with copper down by 0.5% at $7,203 per tonne.

Volume has been average with 5,791 lots traded as at 07.19am London time.

This follows a day of general strength on Wednesday when the complex closed up by an average of 0.4%, with nickel prices rising by 2.6%.

Precious metals were firmer today with gold prices up by 0.1% at $1,300.96 per oz, silver prices were little changed, while the platinum group metals were up by 0.2%.

In China, base metals prices on the Shanghai Futures Exchange were for the most part weaker – the exception being nickel where the most-traded September contract price was up by 0.9%. The rest were down between 0.3% for August copper and zinc and 1.3% for September tin. The August copper contract was recently quoted at 53,550 yuan ($8,362) per tonne.

In other metals in China, the most-traded September iron ore contract price on the Dalian Commodity Exchange was up by 0.6% higher to 472.50 yuan per tonne. Meanwhile on the SHFE, the most-traded October steel rebar contract price rose by 0.2%, while the December silver and gold contract prices were up by 0.1% and 0.4% respectively. Spot copper prices in Changjiang were up by 0.3% at 53,300-53,460 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 7.42.

In wider markets, spot Brent crude oil prices were off by 0.03% at $76.49 per barrel this morning. The yield on US 10-year treasuries has firmed slightly to 2.9588%, as has the German 10-year bund yield to 0.4900%.

Equity markets in Asia were weaker on Thursday: Nikkei (-0.99%), Hang Seng (-1.01%), CSI 300 (-0.22%), ASX 200 (-0.12%) and the Kospi (-1.84%). The weakness seems to be on the back of the more hawkish tone from Wednesday’s US Federal Open Market Committee (FOMC) statement and economic projections. This follows a mixed performance in western markets on Wednesday, where in the United States the Dow Jones closed down by 0.47% at 25,201.20, and in Europe where the Euro Stoxx 50 closed up by 0.11% at 3,479.56.

The dollar index has been drifting lower as it consolidates its April/May strength. The index at 93.42 is within the recent 93.21-95.03 range. Meanwhile, the euro (1.1809), sterling (1.3394) and the yen (109.97) are firmer, while the Australian dollar (0.7550) is weaker.

On the economic front, data already out in China shows weaker-than-expected data on fixed asset investments, industrial production and retail sales, while foreign direct investment climbed 1.35% having previously been up by 0.1%. Japan’s revised industrial production climbed by 0.5%, having previously been up 0.3% and Germany’s consumer price index (CPI) was unchanged at 0.5%.

Data out later includes French CPI, UK retail sales, the European Central Bank rate decision and press conference, along with US data including retail sales, initial jobless claims, import prices, business inventories and natural gas storage.

The base metals prices are diverging with copper and tin prices consolidating recent gains; zinc, lead and nickel prices are holding up well after recent strength, while aluminium prices are drifting lower. Given the poor Chinese data and the equity markets’ reaction to the likelihood of stronger monetary policy from central banks, the climate is not particularly bullish and the market may not see follow-through buying until stronger economic data is seen.

Gold prices got some lift following the FOMC rate rise, perhaps the market is getting concerted about the impact of tighter monetary policy on the broader markets and that has led to some pick-up in haven buying. Silver is looking particularly strong with prices back above $17 per oz.

The post METALS MORNING VIEW 14/06: Disappointing Chinese data weighs on base metals prices appeared first on FastMarkets.

Categories: Metals Industry News

LIVE FUTURES REPORT 14/06: Most SHFE base metals prices up, nickel leads the advance

Thu, 06/14/2018 - 04:32

Base metals prices on the Shanghai Futures Exchange were mostly up during Asian morning trading on Thursday June 14, with nickel climbing more than 2% on strong buying interest, while lead was the sole metal in negative territory.

The most-traded September nickel contract price on the SHFE jumped to 117,040 yuan ($18,276) per tonne as at 10.14am Shanghai time, up 2,320 yuan per tonne from Wednesday’s close.

Volume has been high with 645,316 lots traded as at 10.14am Shanghai time, compared with 555,310 lots at the close on June 7. Open interest stood at 401,800 positions, up 32,070 positions from Wednesday’s close.

Buying interest for nickel in China has picked up on a perceived tightening of supply of the metal and an improved performance in the country’s stainless steel market.

SHFE nickel stocks fell 581 tonnes to 30,635 tonnes as of June 8. Stocks at SHFE warehouses are now down 37.3% since the start of the year. Meanwhile, nickel inventories at London Metal Exchange warehouses fell 972 tonnes to 277,014 tonnes on Wednesday.

“Supply for nickel plate is still tight, and falling inventories are supporting prices,” Citic Futures Research said.

“In addition, nickel pig iron (NPI) prices are being supported by the production disruptions due to environmental crackdowns [in China],” the Citic Futures Research added.

Environmental inspection-related disruptions at NPI smelters in northern and eastern China could remove as much as 5,000 tonnes per month of downstream supply of nickel from the Chinese market due to ongoing environmental inspections in the regions.

In downstream markets, robust stainless steel prices in China continue to underpin prices for nickel.

Metal Bulletin’s assessment of prices for benchmark 304 stainless cold-rolled coil in the major market of Wuxi was 15,800-16,100 yuan per tonne including VAT for the week ended Thursday June 7, up 400-600 yuan per tonne from a week earlier.

Meanwhile, copper prices rose on the back of a weaker dollar during the morning session on Thursday.

The SHFE August copper contract price rose 260 yuan per tonne to 53,790 yuan per tonne as at 10.14am Shanghai time.

The dollar index had initially moved higher after the US Federal Open Market Committee (FOMC) raised interest rates at its meeting on Wednesday, but the strength was short-lived with the move widely expected in the market.

“The FOMC increased interest rates [by] 25 basis points as expected, with its communication a little more hawkish, but only at the margin. There were small changes to the messaging and forward guidance accompanying the decision,” ANZ Research noted.

The dollar index had climbed to a high of 94.05 on Wednesday, but quickly retreated. It was at 93.55 as at 10.12am Shanghai time on Thursday.

Base metals prices

  • The SHFE August aluminium contract price rose 35 yuan per tonne to 14,705 yuan per tonne
  • The SHFE July lead contract price dipped 175 yuan per tonne to 20,330 yuan per tonne.
  • The SHFE August zinc contract price rose 75 yuan per tonne to 24,345 yuan per tonne.
  • The SHFE September tin contract price gained 390 yuan per tonne to 147,890 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.05% at 93.55 as of 10.12am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.09% to $76.58 per barrel as of 10.12am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.22% to 3043.52 at 10.58am Shanghai time.
  • In US data on Wednesday, the producer price index gained 0.5% in May, against an expected increase of 0.2%. Crude oil inventories declined 4.1 million barrels over the past week, against an expected decrease of 1.4 million barrels.
  • In data today, China’s fixed asset investment rose 6.1% year on year in May, against a 7% rise in the prior month, while the country’s industrial production rose 6.8% on an annual basis in May, compared with 7% growth in April.
  • Later we have a host of US data that includes core and headline retail sales, unemployment claims, import prices, business inventories and natural gas storage.

 

LME snapshot at 03.12am London time Latest three-month LME Prices   Price
($ per tonne)  Change since Wednesday’s close ($) Copper 7,212 -45 Aluminium 2,277.50 2.5 Lead 2,473.50 -11.5 Zinc 3,199 -17 Tin 20,870 -5 Nickel 15,595 -30 SHFE snapshot at 10.14am Shanghai time Most-traded SHFE contracts   Price
(yuan per tonne)  Change since Wednesday’s close (yuan) Copper  53,790 260 Aluminium 14,705 35 Zinc 24,345 75 Lead 20,330 -175 Tin  147,890 390 Nickel  117,040 2,320

 

Changjiang spot snapshot on June 14   Range
(yuan per tonne)
 Change (yuan) Copper  53,410 — 53,430 140 Aluminium 14,540 —  14,580 20 Zinc 24,600 —25,600 20 Lead 20,550 —20,750 -50 Tin  146,000—148,000 -2,000 Nickel  117,750 —117,850 1,950

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Categories: Metals Industry News

METALS MORNING VIEW 13/06: Metals prices retreat/consolidate after recent strength

Wed, 06/13/2018 - 09:41

Three-month base metals prices on the London Metal Exchange were for the most part weaker on the morning of Wednesday June 13, the exception being lead which was up by 0.2%.

The rest were weaker with copper, aluminium, nickel and zinc off between 0.4% and 0.6%, with copper at $7,176 per tonne, while tin was down by 1.2%.

Volume has been average with 10,155 lots traded as at 9.38 am London time.

This follows a day of weakness on Tuesday when the base metals complex closed down by an average of 0.4%.

Precious metals were little changed this morning, with gold prices off by 0.1% at $1,294.15 per oz. This a bout of weakness on Tuesday, which saw the complex close down by an average of 0.5%.

In China, base metals prices on the Shanghai Futures Exchange weaker this morning, with the complex down by an average 1.1%, led by a 3.1% decline in the most-traded September tin contract price. Meanwhile, the most-traded August copper contract price was off by 0.8% at 53,530 yuan ($8,358) per tonne.
In other metals in China, the most-traded September iron ore contract price on the Dalian Commodity Exchange edged 0.4% higher to 468 yuan per tonne. Meanwhile on the SHFE, the most-traded October steel rebar contract price rose by 0.9%, while the December silver and gold contract prices were down by 0.2% and 0.3% respectively. Spot copper prices in Changjiang were down by 0.4% at 53,150-53,290 yuan per tonne and the LME/Shanghai copper arbitrage ratio was at 7.46.

In wider markets, spot Brent crude oil prices were up by 0.08% at $75.47 per barrel this morning. The yield on US 10-year treasuries has eased slightly to 2.9572% and the German 10-year bund yield was at 0.4770%.

Equity markets in Asia were for the most part weaker on Wednesday: Hang Seng (-0.94%), CSI 300 (-0.98%), ASX 200 (-0.51%) Kospi (-0.05%), with the only the Nikkei (+0.38%) in positive ground.

The dollar index has been edging higher while it rebounds after its recent mini pullback. The index at 93.88 is within the recent 93.21-95.03 range. Meanwhile, the euro (1.1715) and sterling (1.3347) are consolidating, while the Australian dollar (0.7567), and the yen (110.64) are weakening.

On the economic front, there is data on UK prices, including the consumer price index (CPI), producer price index (PPI), house price index (HPI), and EU data that includes employment change and industrial production. US data of note includes PPI and crude oil inventories, which are followed by the US Federal Open Market Committee’s (FOMC) rate decision, statement, economic projections and conference call.

The base metals prices are diverging with copper, nickel, lead and tin prices giving back some of the strong gains seen in recent weeks, while aluminium prices are weakening and zinc prices are consolidating. Lead and copper prices seem to have found support from supply concerns, while the rest, with the exception of aluminium, got some lift on the back of the rise in copper. A lack of follow-through buying, however, is now leading to consolidation/corrections. We remain mildly bullish, but the market may not see follow-through buying until stronger economic data is seen.

Gold and platinum prices are the weaker ones of the precious metals complex, while silver and palladium prices are giving back some of their recent gains. Gold tends to be weak ahead of an expected FOMC rate rise and then recovers after the rise, we wait to see if that remains the case today.

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Categories: Metals Industry News

LIVE FUTURES REPORT 13/06: SHFE base metals prices all down after disappointing China data

Wed, 06/13/2018 - 04:35

Base metals traded on Shanghai Futures Exchange were all down during Asian morning trading on Wednesday June 13, with zinc, aluminium and tin prices dropping over 1%, following weaker-than-expected economic data from China overnight.

The most-traded August aluminium contract price on the SHFE dropped to 14,720 yuan ($2,298) per tonne as at 11.14am Shanghai time, down 170 yuan per tonne or 1.1% from Tuesday’s close.

China’s total social financing growth, a broad measure of credit and liquidity in the economy, declined to 760.8 billion yuan in May, less than half of the gain recorded in the preceding month. It was also the lowest reading in 22 months.

“Social financing plummeted in May, which indicates that the entire economy will continue to face capital pressure,” Guotai Junan Futures said on Wednesday.

The news reignited fears of a possible slowdown in the world’s second-largest economy due to country’s monetary tightening measures, which have been employed to curb credit risk.

Aluminium prices have come under additional pressure from weakening raw materials prices and rising production volumes in China.

Metal Bulletin assessed Chinese alumina prices at 2,800-2,900 yuan per tonne on June 7, down from 2,900-3,000 yuan per tonne a week earlier. Prices had been as high as 3,100-3,200 yuan per tonne on April 26.

After winter capacity cuts came to an end in the middle of March, Chinese aluminium production rose quickly with April seeing a total of 2.77 million tonnes of aluminium produced, an increase of 1.1% year on year, according to the country’s Bureau of Statistics.

In the first four months of 2018, China produced a total of 10.89 million tonnes of primary aluminium, up 0.2% from same period last year.

This combined with the weakness in raw materials prices was enough to offset the positive sentiment derived from declines in aluminium stocks at SHFE and London Metal Exchange warehouses.

SHFE aluminium stocks fell 5,883 tonnes to 966,824 tonnes as of June 8, while inventories on the LME dipped by 6,325 tonnes to 1,162,650 tonnes on Tuesday.

SHFE zinc prices also fell during Asian morning trading on Tuesday, with large inflows from bonded warehouses significantly easing concerns of supply tightness in the Chinese domestic market. Meanwhile, sluggish demand in the spot market also weighed on prices.

The SHFE August zinc contract price declined 340 yuan per tonne to 24,210 yuan per tonne as at 11.14am Shanghai time

Zinc stocks in Shanghai-bonded warehouses dropped to 206,000-207,000 tonnes at the end of May, compared with 214,000-215,000 tonnes a month ago, according to Metal Bulletin’s assessment.

The decline reflected an opening of the import arbitrage window since May 23, which allowed importers to achieve a better profit on selling imported metal into China, market sources told Metal Bulletin.

“Zinc ingots from bonded warehouses have been flowing into domestic market quickly,” Citic Futures Research noted.

“Spot demand has been weak, which may subdue the zinc price rally seen in previous weeks,” Guotai Junan Futures said.

Base metals prices

  • The SHFE August copper contract price dropped 440 yuan per tonne to 53,530 yuan per tonne
  • The SHFE July lead contract price dipped 115 yuan yuan per tonne to 20,465 yuan per tonne
  • The SHFE September tin contract price fell 2,070 yuan per tonne to 149,800 yuan per tonne.
  • The SHFE September nickel contract price declined 420 yuan per tonne to 114,750 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.05% at 93.88 as at 11.21am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.25% to $75.6 per barrel as at 11.21am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.67% to 3059.36 as at 11.22 Shanghai time.
  • In US data on Tuesday, the core consumer price index (CPI) rose marginally in May, with a 0.2% increase, but bettered an expected increase of 0.1%.
  • The economic agenda is busy today with a host of UK data including CPI, producer price index (PPI), house price index and the retail price index. US data of note includes the headline and core PPI, crude oil inventories, the US Federal Open Market Committee’s rate decision, statement and press conference.

 

LME snapshot at 3.25am London time Latest three-month LME Prices   Price
($ per tonne)  Change since Tuesday’s close ($) Copper 7,195 -27 Aluminium 2,289 -13 Lead 2,477 2 Zinc 3,184.50 -14.5 Tin 20,910 -215 Nickel 15,250 40 SHFE snapshot at 11.14am Shanghai time Most-traded SHFE contracts   Price
(yuan per tonne)  Change since Tuesday’s close (yuan) Copper  53,530 -440 Aluminium 14,720 -170 Zinc 24,210 -340 Lead 20,465 -115 Tin  149,800 -2,070 Nickel  114,750 -420

 

Changjiang spot snapshot on June 13   Range
(yuan per tonne)
 Change (yuan) Copper  53,270 — 53,290 -170 Aluminium 14,520 —  14,560 -270 Zinc 24,580 —25,580 -140 Lead 20,600 —20,800 -50 Tin  148,000—150,000 -1,000 Nickel  115,800 —115,900 200

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Categories: Metals Industry News

HOTTER ON METALS: Metal marketing becoming services game

Tue, 06/12/2018 - 22:18

Producing and then trading metal used to be the purview of just a few, with the supply chain more typically separated into silos and companies making occasional forays into different areas.

But as the line between producer and trader has become increasingly blurred, the differentiator between companies is becoming the services they provide.

As Christophe Allain, group portfolio director for non-ferrous metals at French cable producer Nexans said at a recent Metal Bulletin copper seminar in New York: “It’s not necessarily about being a producer or a trader but about the quality of service you provide.”

This means services such as credit insurance, trade finance and logistics have joined market intelligence and trader savvy as the major criteria used by purchasers of metal to determine the firms from which they buy their material.

Glencore
Center stage in the producer-trader world has for the past several years been occupied by Zug, Switzerland-based Glencore, its status solidified by its merger with Xstrata in 2013.

Before it completed the Xstrata merger, Glencore was a hugely successful trading and marketing firm, with its efforts in this field integrally linked for historical reasons to the industrial activities of Xstrata.

Since that deal was completed, the merged entity has become a mining firm whose results are now dominated by earnings from its industrial assets.

But marketing is still critical, giving Glencore the benefit of trading intelligence – unique insight into commodity direction, corporate activity and peer behavior.

The same entrepreneurial approach that existed prior to the Xstrata merger has remained, with a lack of bureaucracy due to its ownership structure and relatively little rotation of senior personnel between divisions in order to ensure decades of experience at sourcing and integrating deals.

The company is also active in logistics, having acquired warehousing firm Pacorini, renamed Access World, in 2010.

Producers
Glencore isn’t the first company to bridge the gap between producing metal and marketing it. There have been cycles of producers deciding to take a look at the trading or marketing business, in an attempt to understand, optimize and manage risk.

With the dust having settled after the global financial crisis and the balance sheets of the larger miners back in order, producers are once again stepping up efforts to use trading as a way to better market their products.

They’re using their position in the supply chain to their advantage – often a producer has a bigger hedge than a trading firm and has access to key market insights that enhance their understanding of price movements.

Supply chain management and chain of custody issues mean that understanding the provenance of material has become essential, and this is something a producer is well placed to know.

As liquidity has decreased, producers have become far more sophisticated about marketing products directly to their customers, hurting the ability of merchants to make returns.

In a world in which global trade relationships can rapidly change due to tariffs and bans, managing exposure to rapidly plentiful changing risks is key.
But if it were easy, then everybody would be doing it.

Over the years, some producers have tried to replicate the Glencore model, with varying degrees of success. Emulating the financial flexibility of Glencore, with its plentiful free-cash flow and decades-long relationships, is quite complex.

Most miners attempting to build a name in trading have typically focused on boosting sales of their own units, rather than developing and maintaining extensive marketing, logistics, financing and risk management services.

Roberto Ecclefield, Codelco’s new vice president, commercial, singles out logistics as the key area where a trading house can add value for copper producers, given the Chilean company’s goal to be the supplier of choice.

“It’s not for us to try to compete with merchants – we’re not trying to defeat them, or use their model. We’re trying to use the value and service they provide to make us more profitable and the supplier of choice,” he told Metal Bulletin’s copper seminar last week.

There are other challenges: It’s difficult to convince stakeholders of mining companies that trading is a worthwhile value proposition. Trading is often much misunderstood, with the negative connotations of rogue traders firmly ascribed at worst, and the concept of high risk and potentially significant loss an off-putting concern at best.

Explaining and putting a value on its marketing business was an issue that Glencore ran into at the time of its initial public offering. It’s a lot easier to argue the merits of a business unit such as freight and logistics to an investor than it is to ascribe value to a trading operation, even if a company has been doing it successfully for years.

Traders
There are a number of trade houses that also work with industrial assets in some shape or form.

Trafigura, Gerald, IXM (formerly Louis Dreyfus), Transamine and Traxys to name just a few are variously active in tolling or offtake agreements, have stakes in producing or future mines and operate successful concentrate blending operations.

These trade houses also work with producers, including Glencore, in joint ventures, making category lines even hazier.

Liquidity issues often force traders into more niche positions, optimizing a role within a category such as nonferrous metals or a specific metal product.

It nonetheless seems highly unlikely that even a multinational commodity house like Trafigura – which has a vast logistics business and significant global investments in infrastructure – could build an industrial asset base of Glencore’s size without a merger similar to the one with Xstrata.

Might the future hold such a deal? It’s possible, but it still wouldn’t be an instant winner as things stand.

That’s because Glencore’s right to market Xstrata products predated the merger and meant that the companies were already deeply entwined.

Other trading houses have offtake and marketing agreements for specific companies and products, but there is no clearly identifiable relationship between a trader and another large producer similar to the one that existed between Glencore and Xstrata.

It took Xstrata a decade to build itself into a mega-miner, meaning the creation of a firm of the same scale as Glencore today would require M&A with one of the large diversified miners such as Rio Tinto, BHP, Anglo American or Vale.

Never say never, but such a deal doesn’t appear to be in the cards.

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Categories: Metals Industry News

EUROPEAN MORNING BRIEF 12/06: Firmer dollar, easing supply concerns sink SHFE copper; Mn ore, SiMn prices rise in China; Aqua Metals produces first commercial high-grade lead

Tue, 06/12/2018 - 05:10

Good morning from Metal Bulletin’s offices in Asia, bringing the latest news and pricing stories on Tuesday June12.

Copper prices on the Shanghai Futures Exchange weakened during Asian morning trading on Tuesday, with a firmer dollar and easing supply concerns weighing on investors’ appetite for the red metal.

The most-traded August copper contract price on the SHFE dropped to 53,830 yuan ($8,407) per tonne as at 10.28am Shanghai time, down 330 yuan per tonne from Monday’s close.

Check Metal Bulletin’s live futures report here.

LME snapshot at 3.35am London time Latest three-month LME Prices   Price
($ per tonne)  Change since Monday’s close ($) Copper 7,221 -34 Aluminium 2,313 12 Lead 2,482 7 Zinc 3,186 -15 Tin 21,030 -145 Nickel 15,235 -55

 

SHFE snapshot at 10.28am Shanghai time Most-traded SHFE contracts   Price (yuan per tonne)  Change since Monday’s close (yuan) Copper  53,830 -330 Aluminium 14,925 10 Zinc 24,380 -65 Lead 20,510 -35 Tin  151,810 -330 Nickel  114,830 -950

Manganese ore prices rose in China this past week due to higher offers from producers, although few deals took place, especially for 44% manganese ore. The thin trading was attributed to resistant buyers, who preferred to take a wait-and-see stance on the direction of the market, according to sources.

Aqua Metals Inc has begun commercialization of its non-polluting electrochemical lead recycling technology with the production of pure AquaRefined lead.

Physical cobalt prices fell again on June 8, faced with cheaper metal supplies, seasonally weaker spot demand and poor sentiment, market sources told Metal Bulletin.

Steel plate prices in the United States are up for the second week in a row on a potential supply squeeze stemming from Section 232 tariffs on the European Union, Canada and Mexico.

Buying activity in the Commonwealth of Independent States export slab market has shown signs of recovery during the week ended Monday as several bookings were heard done in Southeast Asia and the Middle East.

The post EUROPEAN MORNING BRIEF 12/06: Firmer dollar, easing supply concerns sink SHFE copper; Mn ore, SiMn prices rise in China; Aqua Metals produces first commercial high-grade lead appeared first on FastMarkets.

Categories: Metals Industry News

LIVE FUTURES REPORT 12/06: SHFE base metals prices mostly down, copper leads decline

Tue, 06/12/2018 - 04:45

Copper prices on the Shanghai Futures Exchange weakened during Asian morning trading on Tuesday June 12, with a firmer dollar and easing supply concerns weighing on investors’ appetite for the red metal.

The most-traded August copper contract price on the SHFE dropped to 53,830 yuan ($8,407) per tonne as at 10.28am Shanghai time, down 330 yuan per tonne from Monday’s close.

Falling 0.6% so far in the morning session, red metal prices have come under pressure from a stronger dollar and easing supply-side concerns, which offset declines in exchange inventory levels.

The US dollar index rose steadily overnight and reached a high of 93.90 earlier this morning. This compares with the recent low of 93.21 on June 7.

“A stronger USD and easing concerns about supply disruptions saw industrials ease lower at the start of the week. This saw copper prices tumble, after rising strongly over the past couple of weeks,” ANZ Research noted on Tuesday.

On the supply side, expectations of a resolution being reached in labor negotiations at Escondida, the world’s largest copper mine, have dented investors’ appetite for the red metal.

“Copper continues to struggle on reports of Escondida saying over the weekend that it expects to resolve its labor negotiations successfully. Prices had run up for much of last week on expectations that the negotiations would run into difficulties, but we were skeptical about this market view given that the talks had barely started,” Edward Meir, analyst at INTL FCStone said.

Meanwhile, copper stocks at SHFE and London Metal Exchange warehouses continue to slide, with SHFE inventories falling 16,224 tonnes to 256,030 tonnes as at June 8, while LME copper stocks fell 7,575 tonnes to 299,500 tonnes on Monday.

“In general, the falling stocks support copper prices. However, global trade tensions and the likelihood of an interest hike in China is likely to cap the copper rally seen last week,” Guotai Junan Futures said.

Aluminium prices, little changed with a slight upside bias, were the most resilient of the SHFE base metals complex during the morning trading session on Tuesday. The light metal has been supported by declining stock levels, but weak raw material prices are likely to put a cap on any significant gains.

The SHFE August aluminium contract price edged up 10 yuan per tonne to 14,925 yuan per tonne as at 10.28am Shanghai time.

Aluminium stocks at SHFE-listed warehouses fell 5,883 tonnes to 966,824 tonnes as at June 8.

“Falling stocks are supporting light metal prices, however, raw materials prices are under pressure,” Citic Futures Research said.

Metal Bulletin assessed Chinese alumina prices at 2,800-2,900 yuan per tonne on June 7, down from 2,900-3,000 yuan per tonne a week earlier.

Base metals prices

  • The SHFE August zinc contract price slid 65 yuan per tonne to 24,380 yuan per tonne.
  • The SHFE August lead contract price dipped 35 yuan per tonne to 20,510 yuan per tonne
  • The SHFE September tin contract price fell 330 yuan per tonne to 151,810 yuan per tonne.
  • The SHFE September nickel contract price declined 950 yuan per tonne to 114,830 yuan per tonne.

Currency moves and data releases

  • The dollar index was up 0.08% at 93.74 as at 10.35am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up 0.2% to $76.5 per barrel as at 10.35am Shanghai time.
  • In equities, the Shanghai Composite was up by 0.14% to 3057.15 as at 11.13am Shanghai time.
  • In data on Monday, Italian industrial production for April declined by 1.2% compared with the prior month, against an expected 0.7% decline. UK manufacturing production fell 1.4% in March and its total UK trade deficit widened by £1.9 billion ($2.4 billion) to £9.7 billion in the three months to April 2018.
  • Data out today includes UK labor market indicators, German ZEW economic sentiment and the United States’ core and headline consumer price indices (CPI).

 

LME snapshot at 3.35am London time Latest three-month LME Prices   Price
($ per tonne)  Change since Monday’s close ($) Copper 7,221 -34 Aluminium 2,313 12 Lead 2,482 7 Zinc 3,186 -15 Tin 21,030 -145 Nickel 15,235 -55 SHFE snapshot at 10.28am Shanghai time Most-traded SHFE contracts   Price (yuan per tonne)  Change since Monday’s close (yuan) Copper  53,830 -330 Aluminium 14,925 10 Zinc 24,380 -65 Lead 20,510 -35 Tin  151,810 -330 Nickel  114,830 -950

 

Changjiang spot snapshot on June 12   Range (yuan per tonne)  Change (yuan) Copper  53,440 — 53,460 -400 Aluminium 14,730 —  14,770 20 Zinc 24,720 —25,720 -90 Lead 20,650 —20,850 -50 Tin  149,000—151,000 -500 Nickel  115,550 —115,750 -1,250

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Categories: Metals Industry News

FORECAST: LME zinc-lead outlook set to improve, analysts say

Mon, 06/11/2018 - 14:00

Following a turbulent first half of the year marked by outbreaks of price volatility, forecasts suggest market sentiment towards London Metal Exchange zinc and lead are set to improve on brighter supply dynamics.

Trading at $3,205 per tonne as at 13:30 pm London time on Monday June 11, zinc’s three-month price is recording a steady upward trend after breaking past its nearest resistance level on June 8.

That said, zinc prices have edged away from first-quarter highs that exceeded $3,500 per tonne in February and fell to a 2018-low of $2,970 per tonne on May 4.

Following a similar trajectory, lead’s three-month price is trading close to the $2,500 per tonne level after spending much of May trading around $2,300-$2,400 per tonne.

Similarly, positive trading in February saw lead’s three-month price trade upwards of $2,600 per tonne.

Metal Bulletin Research forecasts lead prices to trade in a range of $2,300-$2,550 per tonne throughout the second quarter, already exceeding its base level forecast of $2,450 per tonne.

Zinc is expected to trade at $2,900-$3,350 per tonne for the same period, according to MBR, with a base level of $3,100 per tonne.

The International Lead and Zinc Study Group (ILZSG) forecasts the usage and supply of both lead and zinc to increase in 2018, with refined lead metal set to rise by 2.7% against refined zinc’s 2% increase.

“Lead and zinc are often found together, but the story is tighter for lead in this case. You may see that gap narrow as lead comes back towards zinc. I do not believe that price action in zinc will be as active as in lead,” Geordie Wilkes, head of research at Sucden Financial, told Metal Bulletin.

Currently at $722 per tonne, the price difference between the two metals reached $544 per tonne on May 24, its lowest gap of the year.

On February 26, the gap reached its widest point in ten years at $960.50 per tonne.

“That said, there are a couple of interesting resistance levels in zinc’s fight. If broken through, we could see further short-covering and a move towards $3,400 per tonne. Inventories for zinc have increased, we’re now at 250,000 tonnes, which is quite interesting. If that continues, it could weigh on prices,” Wilkes added.

Sucden Financial’s quarterly metals report specifies that lead prices fell 4.1% in the first quarter, while falling global supply and poor quality material could be set to support rising prices in 2018, forecasting a range of $2,200-$2,600 per tonne.

The broker’s outlook for zinc also takes into consideration favorable demand spikes at a $3,000-$3,500 per tonne forecasted range, while the drop in treatment charges (TCs) to a low of $147 per tonne has given greater scope for smelters to offset falling TCs through rising utilization rates.

Despite the lowering of annual TCs, mined production for both lead and zinc is set to increase by 4.2% and 5.1% respectively, according to ILZSG.

Wood Mackenzie forecasts the rate of mined production in the zinc market to offset the ability of global smelters to absorb surplus concentrate, resulting in an eventual levelling out of TCs.

That said, the energy research consultancy sees a favorable upward spike in zinc prices for the latter half of 2018, with its three-month price expected to drift beyond $4,125 per tonne in 2019.

Foreseeing the lead market taking an alternate path, one that could see prices tick downwards from this year’s prospected $2,460 per tonne figure, Wood Mackenzie maintains a positive view on lead prices remaining supported above $2,250 per tonne in the long term.

 

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Categories: Metals Industry News

METALS MORNING VIEW 11/06: Metals consolidate recent gains, await further developments

Mon, 06/11/2018 - 09:10

Three-month base metals prices on the London Metal Exchange were split into two camps on the morning of Monday June 11, with lead, zinc and aluminium prices moving higher, while the rest weakened.

Lead outperformed this morning with a 1% gain to $2,492 per tonne, with zinc and aluminium registering increases of 0.3% and 0.2% respectively. Tin led on the downside with a decline of 0.5%, while copper was off by 0.4% at $7,278 per tonne and nickel dipped by 0.1%.

Acrimonious G7 talks with the United States souring relationships with the other members have dulled sentiment in the metals, especially in copper, where prices had been buoyant on a combination of potential supply disruptions at Escondida and strong Chinese economic data that saw the country’s producer price index (PPI) rise 4.1% in May from 3.4% previously.

Trading volume has been above average with 11,245 lots traded as at 8.29am London time.

In the precious metals, gold prices continued to meander sideways either side of $1,300 per oz and were recently quoted at $1,297.87 per oz. Platinum prices were following gold’s lead, while palladium and silver prices have been following the industrial metals higher.

Base metals prices on the Shanghai Futures Exchange, as on the LME, were split this morning. The most-traded August copper contract price increased 2.4% to 54,130 yuan (8,452) per tonne, while the July lead and August zinc contract prices were both up by 0.2%. The September nickel contract price fell 0.8%, the September tin contract price declined by 0.5% and the August aluminium contract price dipped 0.4%.

In other metals in China, the most-traded September iron ore contract on the Dalian Commodity Exchange edged 0.6% higher to 470 yuan per tonne. Meanwhile on the SHFE, October steel rebar prices rose by 0.2%, while the December silver and gold prices were both up by 0.2%. Spot copper prices in Changjiang were up by 0.5% at 53,750-53,880 yuan per tonne.

Equity markets in Asia were mainly positive on Monday: Nikkei (+0.48%), Hang Seng (+0.56%), CSI 300 (+0.01%), Kospi (+0.76%) but the ASX 200 was down by 0.2%. This follows the firmer performance in western markets on Friday, where in the US the Dow Jones closed up by 0.30% at 25,316.53.
The dollar index has been under downside pressure since it reached a 2018 peak of 95.03 on May 29 – it was recently quoted at 93.40. Trade frictions between the US and its key trade allies continue to undermine the index. Meanwhile, the other major currencies we follow were consolidating: euro (1.1813), the Australian dollar (0.7610), sterling (1.3432) and the yen (109.98).

On the economic front, there is data on Italian industrial production, along with UK releases including manufacturing and industrial production, construction output and goods trade balance.

Most of the base metals prices have been moving higher again in recent days, albeit in a choppy fashion – the main exception has been aluminium that is stuck sideways. Key now will be whether there is follow-through buying. Last year, the second quarter was generally subdued with prices only starting to pick up in mid-June, so we may be in for a repeat performance. Economic data continues to be mixed, but there are some brighter spots as seen by the May purchasing managers’ index (PMI) data. We remain quietly bullish, but needless to say the rally in copper will be semi-dependent on the outcome of labor contract negotiations at Escondida, where the company, BHP, will respond to a counter-proposal by the workers’ union today.

Gold and platinum prices are stuck in sideways trading ranges, with even the pullback in the dollar index not providing much drive, but silver and palladium prices do seem to be benefiting from the stronger tone in the other industrial metals. We expect more of the same.

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Categories: Metals Industry News

LIVE FUTURES REPORT 11/06: Copper leads SHFE base metals prices upward

Mon, 06/11/2018 - 04:43

Base metals prices on the Shanghai Futures Exchange were up across the board during Asian morning trading on Monday June 11, with copper leading the advance following the release of healthy Chinese economic data over the weekend.

The most-traded August copper contract price on the SHFE rose to 54,260 yuan ($8,472) per tonne as at 9.50am Shanghai time, up 480 yuan per tonne from Friday’s closing price.

“China’s economic data for last month released on Saturday was in line or better than expected, which supports a bullish outlook for the red metal from a macroeconomic perspective,” Xianfei Ji, analyst at Guotai Junan Futures, said.

In data released over the weekend, China’s consumer inflation (CPI) rose by 1.8% year on year in May, which was in line with market expectations. Meanwhile, the country’s producer price index (PPI) rose by 4.1% in May from a year earlier, bolstered by a recent jump in commodity prices, according to China’s National Bureau of Statistics.

“The ongoing environmental inspection [across China] will also support copper prices by reducing supply, so we expect more upside for copper futures prices with a temporary limit of 55,000 yuan per tonne,” Ji added.

Though China domestic copper cathode output increased year on year in May, the market is seeing stronger demand for the material, which supports analysts’ bullish sentiment for the red metal.

“From a demand perspective, tenders for the first batch of [electric vehicle] charging stations increased by 204% on a yearly basis, which was much better than expected and anticipated to promote the high growth of the charging pile industry and become a new demand engine for copper demand this year,” Citic Futures Research said.

In supply news, BHP will respond to a counter-proposal by the workers’ union at its Escondida copper mine in Chile on Monday, the Escondida No 1 union said on its website, which could advance progress in the ongoing dispute between the two parties amid rallying copper prices.

Citic Futures Research expects a higher probability of an agreement being reached rather than a strike taking place, given the current elevated copper prices.

Base metals prices

  • The SHFE September nickel contract price jumped by 1,110 yuan per tonne to 116,010 yuan per tonne.
  • The SHFE August aluminium contract price edged up by 5 yuan per tonne to 14,915 yuan per tonne.
  • The SHFE August zinc contract price rose 150 yuan per tonne to 24,410 yuan per tonne.
  • The SHFE September tin contract price increased 240 yuan per tonne to 152,290 yuan per tonne.
  • The SHFE July lead contract price climbed 120 yuan per tonne to 20,505 yuan per tonne.

Currency moves and data releases

  • The dollar index was down by 0.09% at 93.47 as at 11.21am Shanghai time.
  • In other commodities, the Brent crude oil spot price was up by 0.15% to $ 76.49 per barrel as at 11.21am Shanghai time.
  • In equities, the Shanghai Composite was down by 0.20% to 3,061.37 as at 11.22am Shanghai time.
  • The economic agenda is light today with UK data including manufacturing production, goods trade balance, construction output and industrial production of note.

 

LME snapshot at 2.48am London time Latest three-month LME Prices   Price
($ per tonne)  Change since Friday’s close ($) Copper 7,296 -12 Aluminium 2,305 -2 Lead 2,482 15 Zinc 3,192 -11 Tin 21,085 -85 Nickel 15,465 15

 

SHFE snapshot at 9.50am Shanghai time Most-traded SHFE contracts   Price
(yuan per tonne)  Change since Friday’s close (yuan) Copper (August) 54,260 480 Aluminium (August)
14,915 5 Zinc (August)
24,410 150 Lead (July)
20,505 120 Tin  (September)
152,290 240 Nickel (September)
116,010 1,110

 

Changjiang spot snapshot on June 11   Range
(yuan per tonne)
 Change
(yuan)
Copper  53,840—53,860 410 Aluminium 14,710—14,750 -20 Zinc 24,810—25,810 250 Lead 20,700—20,900 150 Tin  149,500—151,500 0 Nickel  116,850—116,950 550

 

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Categories: Metals Industry News

FOCUS: Copper price spike may not be sustainable amid mixed supply signals

Fri, 06/08/2018 - 19:30

Recent spikes in the price of copper may not go very far, with supply trends showing a mixed picture, market analysts said on Friday June 8.

While market watchers attribute price rises to concerns about the stability of supply, because of the wage negotiations at Escondida in Chile and a shutdown of Sterlite’s smelter in southern India, the rising terms of copper concentrates treatment charges (TCs), typically a sign of ample raw material supply, have suggested other factors.

Copper prices on the London Metal Exchange surged to five-year high on June 7, surpassing $7,300 per tonne for the first time since October 2013. Copper volumes traded on the exchange were also at their highest since February this year.

The price rally was driven mainly by the uncertainties created by wage negotiations at the Escondida copper mine in Chile, which produces 5% of the world’s copper supply, analysts said.

“All eyes are on Escondida, with supply disruptions continuing. Wage demands are at their highest, with enough financial reserves to [survive] strikes not unlike those seen last year. [Because the mine] provides 5% of global copper supply, it is a big concern for the market,” James Mills, analyst at SP Angel, told Metal Bulletin.

Last year, a record 44-day strike at Escondida, the world’s largest open-pit mine, took 200,000 tonnes of supply out of the market. The strike was said to have shifted the market into deficit and was part of the reason why copper prices rallied by around 25% in 2017.

“If there’s a deal [agreed at Escondida], prices should unravel. The market has tightened in the second quarter [of 2018]. Inventories are falling [and are] lower today compared with a week ago, and copper’s market fundamentals are tighter. As long as the standoff continues, then much of the market is seeing that ‘no news is bad news’,” Robin Bhar, head of metals research at Socgen, told Metal Bulletin.

In addition, Tuticorin, Sterlite’s refined copper smelting complex in India with capacity for 400,000 tonnes per year, has recently been ordered to remain closed indefinitely under orders of the regional Tamil Nadu government.

Fears of supply tightness are also said to be sending the red metal’s cash/three-month spreads into backwardation. These are currently at a $11.50 per tonne backwardation, compared with a $15.00 per tonne contango on June 1.

Copper’s total LME inventory has fallen by 3.4% since the beginning of June to 307,075 tonnes.

But another analyst thinks that the risks of supply disruption are unlikely to swing the market into imbalance.

“Counting on a higher supply disruption rate than usual for 2018 was a tough sell, because fewer greenfield mines are ramping up and prone to delays,” Oliver Nugent, an analyst at ING, said in a research note.

The supply of copper concentrates, which are the raw materials for refined copper, also appear to be ample because treatment charges have surged to their highest level since January this year.

At end of May, the Metal Bulletin spot copper concentrates index rose by $1.10 per tonne/0.11 cents per lb to $71.60/7.16 cents, with tonnages that were scheduled to head to Tuticorin being diverted into the spot market and picked up by other smelters, implying limited consequences.

“Our base case doesn’t see prices break much higher than $7,000 per tonne. To really back this rally, we would need to see physical conditions tighten: a prolonged Escondida strike [would] need to happen,” Nugent said.

Copper’s price has rallied by more than 7% so far in June, but the red metal is already showing signs of profit-taking, with current three-month figures retreating back below $7,300 per tonne.

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Categories: Metals Industry News

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